Make Kitco Your Homepage

Brazil's central bank buys 41.8 tonnes of gold in June

Kitco News

Editor's Note: With so much market volatility, stay on top of daily news! Get caught up in minutes with our speedy summary of today's must-read news and expert opinions. Sign up here!

(Kitco News) - Gold is back in demand among central banks. The Brazilian central bank increased its precious metals holdings by more than 52% in June.

According to a report from the Rio Times, the Banco Central do Brasil bought 41.8 tonnes of gold last month. Its gold reserves as of the end of the month are valued at $6.873 billion. According to reports, this is the central bank's biggest gold purchase since at least December 2000.

It has been a busy spring for Brazil's central bank. It bought 11.9 tonnes of gold in May, which marked its first increase in its reserves since November 2012.

According to the latest data from the central bank, total international reserves were valued at $352.5 billion. The bank's gold holding represents 1.9% of total reserves, up from 1.2%.

While Brazil has been busy in the gold market, the South American country is not alone. It was a busy second quarter for central banks. While June numbers are still being compiled, the World Gold Council (WGC) said that 56.7 tonnes of gold were bought in May.

"The steady buying in recent months stands in contrast to the more inconsistent picture from mid-2020 when central banks switched between net buying and selling," said Krishan Gopaul, senior analyst at the WGC, said in a report published in early July.

When it comes to official sector demand, Thailand led purchases during the second quarter after buying 90.2 tonnes of gold in April and May. The World Gold Council says that Thailand's central bank has increased its gold reserves by 60%.

Brazil comes in second place with its 53.7-tonne increase in the second quarter.

Other notable central bank buyers during the second quarter include Kazakhstan, which bought a total of 9.9 tonnes of gold in April and May. Meanwhile, Poland increased its gold reserves by 1.9 in May. India increased its gold reserves by 0.9 tonnes in May.

The WGC has consistently said this year that they expect central banks to be net buyers of gold in 2021; however, they added that demand is likely to be down compared to the record levels seen in 2018 and 2019.

Last month the WGC released its annual Central Bank Gold survey. It noted that 21% of central banks expect to increase their gold reserves within the next year, relatively unchanged from 2020.

"This year's survey continues to highlight significant interest in gold amongst central banks, with the backdrop of the COVID-19 pandemic underscoring the importance of maintaining liquid, uncorrelated assets in a reserve portfolio. Inflation has also resurfaced as an investment consideration and may inform central bank asset allocation in the coming years," the analysts in the June report.

Outside of central bank, consumer demand also remains robust. The National Bank of Kazakhstan announced on July 1, that its citizens bought 1,813 in small bars small for a total weight 60.7 kilograms.

The bullion program was launched in 2017 and a total of 54,780 gold bars or1.95 tonnes have been sold in the last four years.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.